Crude oil is heading for its second straight weekly gain, with Brent settling Friday just under $94 a barrel and West Texas Intermediate around $86.64, as Washington signaled it is preparing to escalate economic pressure on Iran rather than pursue a swift reopening of the Strait of Hormuz.
Brent has climbed roughly 6% this week, building on gains from the prior week as traders priced in the possibility of a longer, harder-edged confrontation. The move followed remarks Thursday from Treasury Secretary Scott Bessent, who told CNBC the U.S. is preparing what he called the "toughest sanctions in history" on Tehran, layered on top of the naval blockade the U.S. imposed on Iran in April.
It is a one-two punch. We have the blockade, and we are going to have the toughest sanctions in history … It is going to work in Iran and we are going to collapse this regime.
Scott Bessent, U.S. Treasury Secretary
Bessent said he would lay out the specifics of the new measures at a press conference Monday, framing the sanctions push as an alternative to a broader military escalation. Asked about the price spike his own comments triggered, he told CNBC he was "not sure why oil has popped up on this," arguing that maximum economic pressure made a large-scale return to combat less likely, not more.
Five months of disrupted shipping
The Strait of Hormuz, through which roughly 13 million barrels a day of crude normally moves — about a fifth of global oil consumption — has carried only a fraction of its usual traffic for most of the past five months amid periodic Iranian attacks on shipping and retaliatory U.S. strikes. The International Energy Agency has called it the largest supply disruption in the oil market's history. China has cut its oil imports and drawn down stockpiles, while Gulf producers have shifted some barrels to pipeline routes that bypass the strait.
Prices dipped briefly from session highs Friday after Iranian President Masoud Pezeshkian said it was "better to end the war today, when we have power and dignity," a rare public call from Tehran to wind down the conflict. Oil recovered most of that move within hours, traders said, as the market continues to defer to hardliners in Iran's military leadership who have argued for continuing to press the fight rather than negotiate from what they see as a position of strength.
The sustained supply squeeze has pushed U.S. diesel margins — the profit refiners earn turning crude into diesel — above $100 a barrel for the first time on record, according to tracking by OilPrice.com, a sign the disruption is feeding through to fuel costs well beyond the crude benchmarks. That squeeze was cited by Walmart's finance chief this week as one factor pressuring shoppers, underscoring how the Iran standoff is now bleeding into the domestic economic data traders watch most closely.
